There were no major fireworks in Chancellor Philip Hammond’s Autumn Statement given the true state of the post-Brexit referendum economy as revealed by the Office for Budget Responsibility (OBR).
The OBR forecast that Government borrowing will rise and revised its growth expectation for 2017 down to 1.4% from 2.2%.
As Guardian columnist Larry Elliot said: “Philip Hammond’s message was stark and clear. The result of the EU referendum in June means the economy has arrived at a reality checkpoint. Deep-seated weaknesses will be exposed….. The chancellor was candid about Britain’s woefully poor productivity record. He admitted that infrastructure was deficient.”
In many ways, it confirmed what many SMEs have been saying for some time.
Was there any good news in the Autumn Statement for SMEs?
In our wish list earlier in the week we hoped for some recognition of the importance of SMEs to the economy and wanted to see some practical commitment to investing properly and quickly in both improving the UK’s physical infrastructure such as roads and rail for freight transport, and real signs of progress on getting reliable digital infrastructure, such as high speed broadband, to the many SMEs that are based throughout the country in rural locations and small towns.
There was some of that in the promises of £1.1bn extra investment in English local transport networks, £220m to reduce traffic pinch points, £23bn to be spent on innovation and infrastructure over five years, more than £1bn for digital infrastructure and 100% business rates relief on new fibre infrastructure, £1.8bn from the Local Growth Fund to English regions and Rural Rate Relief to be increased to 100%.
It was something of a “swings and roundabouts” budget because at the same time, some measures will increase business costs, such as the increase of the national living wage from £7.20 an hour to £7.50 for employees aged 25-plus in April 2017, increases to insurance premium tax, and changes to National Insurance rates.
Will any of this come in time to make a real difference to struggling SMEs?
While small builders get a boost from the promised £1.4bn for 40,000 extra affordable homes and van delivery and freight haulage companies will breathe a sigh of relief that fuel duty will not rise, lettings and estate agencies will be hit by the decision to ban upfront fees to tenants in England “as soon as possible”.
Generally, 100% Rural Rate Relief and the emphasis on investment in local physical and digital infrastructure should help those rural and small town SMEs – if it doesn’t take too long and actually reaches those parts.
As CBI director-general Carolyn Fairbairn emphasised, the plans needed to be put into action: “That means Tarmac, tracks and telecoms being laid, and clear, deliverable timetables for major projects – only then will they act as a catalyst for investment, jobs and growth.”